Forest Biodiversity and Timber Extraction

1. Forest Biodiversity and Timber Extraction Kanchan Chopra Pushpam Kumar Institute of Economic Growth Delhi 110007 India Fourth Bio-Econ Workshop, Venice August 28-29, 2003.

2. Forest Biodiversity and Use for human well-being Forests can provide a range of products and services for human use, primarly due to diversity inherent in them, thereby contributing to human wellbeing The mix that is available depends on the demand and the nature of the economic regimes within which they are extracted Often, market and non-market regimes operate together in provision e.g.of timber and non-timber forest products. The multi-product and multi-regime nature interacts. Changes in biodiversity change the cost of extraction. Policies also change the supply to the advantage of the marketed The multi-product and multi-regime nature interacts. Changes in biodiversity change the cost of extraction. Policies also change the supply to the advantage of the marketed

3. Forest Biodiversity and Timber Extraction The interaction takes place in two ways: through the effect of changed biodiversity on the extraction effort for the marketed product: timber through policies that increase the supply of marketed product Combined impact over time is examined in this paper

4. Organisation of the Paper Characterisation and Measurement of Bio-diversity Bio-economic indices as measures of biodiversity in use The theoretical model The reduced form equations and the econometric estimation Results and Discussion

5. Characterization and Measurement of Biodiversity Biodiversity: the variety and variability of life forms from the molecular to the biome level:Three disciplines characterize and measure biodiversity: Taxonomy: provides the reference system and depicts patterns of diversity Genetics: knowledge of gene variations within and between species Ecology: provides knowledge of ecological systems in which diversity is based

6. Eco-systems and Biodiversity Measurement of biodiversity can be made in alternative ways: Number of species Size of an area as a measure as in island biogeography theory Functional diversity: Ecologists envisage functionality as relevant for the eco-system itself: ecological functionality Social Scientists’ interest is in use value or functionality in relation to humans

7. Diversity and Use by Humans The study of forest products as timber and non-timber forest products provides a measure of diversity in use Weighted index of Bioeconomic Diversity: Sigma (piyi/TR)**2 where TR= Sigma piyi In finding values of timber: Market prices For non-timber: non-market values Note that a value of the index close to 1 indicates that fewer products are being extracted.Note that a value of the index close to 1 indicates that fewer products are being extracted.

8. The Biodiversity Index The pi s stand for value, not market price only For some commodities, market prices may measure value For others, value may be measured by labour for extraction, non-market traded value etc. The higher the index, the lower the functional biodiversity of the forest

9. The Model The Gordon Schaeffer model is the starting point for the present model A multi-species natural forest is like a pool from which valuable species are being extracted: products are ranked by value and high value products extracted first

10. The Model Y = f(E, X) where Y: extraction of timber E: effort : X: Stock of timber Changes in stock are given by X dot =rX(1-X/K)-qEX………..(1) r:net rate of regeneration q: coefficient depicting availability of timber species and qEX: Extraction (natural forest here: no rotation: extraction proportional to effort)

11. The model ctd. Forest departments manage parts of forests for sustainable extraction of timber (not for sustainable extraction of all goods and services) we put X dot = 0 Hence we obtain, extraction Y=qEX (a function of effort and extraction as Y=qEK(1-qE/r), a function of E and K

12. The modified model Bio economic Diversity Index: Sigmai (Pi Yi /TR)**2 and TR = SigmaiPiYi Now, Y=qBEX…………….(4) B, the biodiversity index is a shift parameter implying extraction per unit effort Y/E=F(B,X): model with biodiversity

13. The modified model continued Interest in timber extraction results in more plantation forests, growth function becomes: Xdot = rX(1+eW-X/K)-qEX……..(5) W: Ratio of plantation area to total forest area e: coefficient for impact of W on timber stock

14. The modified model ctd: However, B=f(W) with B increasing as W increases (less diversity with plantations) New growth and sustainable yield functions for timber: Xdot = rX(1+ eW-X/ K)-qBEX……..(6) Y = qKBE(1+eW-qBE/r)………….(7)

15. Reduced form of Equations Define Extraction per unit effort, U Without biodiversity index: U= Y/E With bio-diversity effort: U = Y/BE In both cases, X=U/q Growth function(6) is expressed in terms of U Udot =rU(1-U/qK +eW)-qBEU U dot/U= r –qBE-(r/qK)U +reW…….(8)

16. Methods of Estimation The above is a recasting of the Schaefar model as a dynamic, discrete time, model Leads to a differential equation in Ut(Schnute) Adding time subscripts and integrating from t-1 to t, we get (with U defined with and without B as Ut and Ubt) ln(Ut/Ut-1) =r-qEt-(r/qK)Ut+reWt+e’…….(9) ln(Ubt/Ubt-1)= r-qEt-(r/qK) Ubt+reWt+e’..(10)

17. Data Aspects: Forests in a north Indian State The state of Uttar Pradesh in Northern India has an area of 29.441 million hectares with 17.29% as forest area Seven types of forests: three tropical subtypes, one sub-tropical, sub Alpine and Alpine……..Many species natural forest with small managed patches Another characterisation Dense: with more than 70% canopy cover Open: 30-70% canopy cover; scrub: 10-40 % canopy cover.

18. Forest Characteristics and Data No single dominating species: hence very diverse Land use changes documented: plantations increasing over time Output: Extraction of timber 1975 to 2000 Extraction cost: Costs of felling and transportation to the forest gate, corrected for difference between monetary and real wage rate to approximate the “effort”variable

19. Biodiversity Index As stated above, it is a bioeconomic diversity index Data on quantity of timber and NTFP extraction from forest department Sales Value of timber and NTFP from UP Forest Corporation: market prices for timber: different kinds of values for NTFPs

20. Three Selected Equations I ln (Ut/Ut-1) =f( Et, Ut) II ln (Ubt/Ubt-1) =f( Et*, Ut*) III ln (Ubt/Ubt-1) = f(Et*, Ubt*, Wt) Ut and Ubt being defined as with and without the biodiversity index

21. Data Sources Output of timber in cubic metres per annum for 25 years: from Annual Reports of Forest Corporation of UP Effort in Extraction: treated as costs of felling and transportation to the forest gate: deflated by an index of labour cost to arrive at the “effort” variable Bioeconomic index of diversity: Timber and non-timber products and their value, market or otherwise.

22. Results and Discussion Equation III gives best results in terms of explanatory power, nature of fit and DW statistic: the dependent variable is in logarithmic form and a ratio of two years observations are taken, robustness of the results is ensured III: Log (Ubt/Ubt-1)= r+ (0.4495)0.0853Et +(2.9636)00169*Ubt +(2.8354)8.7454** Wt

23. Results and Discussion Ctd. In this form of the equation,explanatory power increases and Extraction Y is positively related to Effort E though not a significant determinant of trends in extraction over time Extraction increases over time (significantly) as W increases (planted area increases ) Extraction increases over time (significantly) as Ubt increases

24. Results and Discussion Consider that Ubt is defined as Y/BE: It can increase With increasing B if Y rises faster than B (with constant E). In other words, a decreasing biodiversity with extraction rising faster, pushes the system towards a state in which increases in extraction take place at an increasing rate With falling B, (increasing biodiversity), Ubt could decrease if Y is not rising faster than B is decreasing. This could lead to a decreasing trend in extraction in following periods of time.

25. Conclusions and Pointers A decrease in biodiversity may imply a rise in extraction and at a rising rate An increased biodiversity ingeneral means higher extraction may imply a decreasing trend in the rate of extraction in the future if present extraction does not rise faster than the rate of increase in biodiversity Together, these two results point to a distinct trade-off between timber extraction levels in the short and long time periods in the scenarios studied.

26. Conclusions and Pointers Implies that a reduced biodiversity may or may not be good for timber extraction in the long run The model attributes it to two kinds of effects : through increasing cost of extraction and policy encouraging monoculture Plantation policies must balance timber extraction and biodiversity maintenance objectives